How Does Local Government Amalgamation Affect Spending? Evidence from Louisville, Kentucky

Abstract

While local government consolidation (amalgamation) has a long history among U.S. cities and counties, few studies have provided a rigorous analysis of the impact of consolidation on spending. This article addresses this issue through analysis of the 2003 consolidation of Louisville and Jefferson County, Kentucky, USA. We use financial data on the level and share of spending by function before and after the consolidation to examine changes in inflation adjusted spending. Total spending was variable after consolidation but generally higher than in the preconsolidation period. Per capita expenditures tended to be flatter. Several spending categories (general government and administration, inspections and permits, culture and recreation) increased around the time of the consolidation and then returned to the preconsolidation spending levels. Solid waste expenditures were relatively consistent over the entire period. Spending on public safety and public works increased and remained higher after consolidation. There were changes in spending priorities with public safety and public works experiencing substantial increases and the share of spending on general administration decreasing immediately following consolidation.